Market Report

Pressure back on graphic paper

Tilburg, September 15th, 2019

UPM has decided to sell their mill Chapelle Darblay in Grand-Couronne (Rouen, France), which is producing newsprint. If no candidates are found by mid January, the mill which employs 246 people will be closed down. This is not the only restructuring measure UPM is taking. The SC paper machine in Rauma (Finland) will be stopped indefinitely, which will make 179 people redundant. Reason given is that the market for graphic paper is structurally shrinking since more than 10 years and that today’s unfavorable economic climate has speeded up that decline. The mill in Rouen is under scrutiny already for a while and over the past years it was indicated on several occasions that a solution had to be found for the ongoing negative results. With the ‘revival’ of the graphic paper market last year this solution became less urgent, but now we are back in reality again. The chance that a buyer will show up to either continue newsprint production or will reconvert the machine to produce packaging paper can be considered as non-existing. Papresa in Spain is for sale already a while and some months ago there were rumors that several potential buyers were interested in a take-over, but in the meantime it has gone quiet there. Not surprising – there is plenty available of everything. For packaging paper there are still some projects of new capacity to start up soon and consumption of graphic paper keeps on going down. In the USA the production of graphic paper went down by almost 6% in the first 6 months of this year compared to the same period last year and remarkable was that also production of packaging paper went down by 4%. It therefore is strange that many players in our sector think that the start-up of new capacity can help to solve the problem of the oversupply in recovered paper. Total consumption of paper and board is not growing anymore, so the only thing that could give us a hand is the closure of capacity that is not using recovered paper and replacing it by recovered paper based pulp or paper. So, Chapelle Darblay is not a good example. The misery with graphic paper is continuing and looking back over the last year we can only come to the conclusion that it has transformed into a real battlefield. Only last week Corelio in Belgium went bust to be acquired by Moderna Printing a few days later saving 90 jobs of the 168. These developments put pressure on the sales prcies of finished paper and that will be the reason, amongst others, that the deinking grades recovered paper used in that sector are heading down fast now. A grade like overissued newspaper has been halved in price compared to what Chinese buyers were paying in the second half of 2018. Yes at that time prices were perhaps extreme, but still. Furthermore prices of other grades continue to be under pressure and with the prices being lower every month, we are unable to catch up with our purchase prices. Not simple really. And there is no light at the end of the tunnel either. We should get more demand first, but it does not look anything like that at all.   


Imports of recovered paper into China

Imports of recovered paper into China ,mounted to 5.517.000 tons in the first 4 months of 2019.  This was 1.871.000 tons less than in the same period of 2018. Import licenses were issued for 8.267.000 tons till the end of May, so 2.656.298 tons less than in the same period of 2018. Reduced imports were compensated to a lesser extend by more imports of recycled pulp (+71.000 tons), but surprisingly imports of pulp were reduced by 493.460 tons in the first 4 months of 2019. In total imports of raw material for the paper and board industry went down by 2.293.000 tons in the period 1.1 – 30.4.2019, of which 493.460 tons of pulp for which no import license is needed. It shows that the (limited) import licenses for recovered paper are not the (only) problem for the paper and board industry.  
In 2018 imported volumes of recovered paper in China went down 33.8% compared to 2017. In 2017 and 2016 also imported volumes went lower already compared to previous years with 9.8% and 2.7% respectively. The drop in 2018 could have been much worse if imports in the last Quarter would not have been increased by 34% compared to the same period of 2017. This was probably due to the active use of the yet available import licenses. And, the average price of imported recovered paper went up by $ 20 per ton compared to 2017. Next to mixed paper, that was not imported at all anymore, imports of all other grades dropped as well, like corrugated and kraft grades -14%, deinking grades -31% and high grades -17.1%. Furthermore it worked out that only Japan and other Asian countries last year exported more volumes to China, +9.8% = 244.000 tons and + 39.6% = 520.000 tons respectively. Against that, imports from the U.S.A. (-45.5%) and Europe (-38.1%) went down significantly. Imports from all other regions went down as well.

Price indication

Price indications in Europe for low grades of recovered paper, sorted, baled and ex-works are now between € 20 and € 120 per ton. These prices are depending on quality, available volume, region and loaded weight.

Click here for the price chart, with prices of the last 10 years.
The price chart gives an indication of the price of mixed paper in the Netherlands free delivered mill over the last years.  Scrolling over the top of the colums gives the exact price indication in Euro's per ton.

To view the price chart completely, please click and hold on the price chart after opening and move cursor to left or right to see all available years/months